Mumbai: Gujarat State Petroleum Corp. Ltd (GSPC) has scrapped a plan to sell a stake in 20 of its onshore exploration and production (E&P) blocks, two officials aware of the development said.

The firm had decided to sell stakes in these blocks last year because of financial difficulties. The Gujarat state-owned GSPC had hired consulting firm EY to prepare a report on the blocks for the stake sale. “GSPC has scrapped the process of selling stakes in the 20 onshore blocks. With our key asset, the Deen Dayal Block in the KG-basin, going to ONGC (Oil and Natural Gas Corp. Ltd) , we need to keep some blocks to maintain our upstream status,” said the first GSPC executive aware of the development. He spoke on the condition of anonymity.

He added GSPC is performing better than expected and is confident of meeting its funding plan with regard to these blocks.

GSPC did not reply to an email seeking comment sent on 3 March.

GSPC is the flagship company of the GSPC Group, primarily engaged in E&P of oil and gas. The government of Gujarat owns 87% of the company’s equity capital.

EY was hired by GSPC last year to re-evaluate the prospects of the onshore exploration and production blocks held by the firm. GSPC holds a participating interest in 24 blocks of which 20 are onshore and four are offshore. Seventeen onshore blocks are producing properties. Of the 24 blocks held, GSPC is an operator in six blocks and a non-operating partner in 18. “With the earlier stake sale plan, GSPC wanted to evaluate if it can induct a strategic or technical partner by selling a part of the stake held by it and use the proceeds to meet financial obligations,” said the second official aware of the development. He spoke on the condition of anonymity.

State-run ONGC agreed to pay $1.2 billion to GSPC for the purchase of its 80% stake in Deen Dayal block located in Krishna Godavari (KG) basin offshore.

“The deadline for the deal to close is 31 March, but it is conditional to GSPC getting a no-objection certificate from the bank for the debt GSPC has,” said the first official cited above.

GSPC had invested $3.5 billion (approximately Rs20,000 crore) in its Deen Dayal block, which saddled the company with debt. The sales proceeds from the block will be used to cut debt, the first official cited above added.